Skip to content
ClosingCodeClosingCode
ENES

New York · General Obligations Law §7-105New York tenant security deposits when selling a rental: turn over within five days and notify the tenant

In New York, an owner holding a tenant's security deposit must, when conveying the property, turn the deposit over to the grantee at the time the deed is delivered or within five days afterward, and notify the tenant by registered or certified mail of the transfer and the new owner's name and address (Gen. Oblig. Law §7-105(1)). An owner that turns the deposit over is relieved of liability to the tenant for repaying it, and the buyer becomes responsible for returning it – unless the buyer later transfers it again with the same notice (§7-105(2)). The section yields to an inconsistent lease, and failing to comply is a misdemeanor (§7-105(2)–(3)).

The rules

  1. 1. Turnover (§7-105(1))

    To the buyer at the deed delivery or within five days.

  2. 2. Notice (§7-105(1))

    Registered or certified mail to each tenant with the buyer's name and address.

  3. 3. Liability (§7-105(2))

    The seller is relieved; the buyer owes the deposit.

  4. 4. Penalty (§7-105(3))

    Failing to comply is a misdemeanor.

What the TC can do

  • Collect the rent roll and the deposit amounts from the seller before closing.
  • Make sure the deposits are credited or transferred to the buyer at closing.
  • Remind the seller to mail the certified or registered notice to each tenant within five days.

Questions about New York deposits on a sale

Who returns the deposit after a New York rental is sold?

Once the seller turns it over to the buyer and notifies the tenant, the buyer is responsible for returning it (Gen. Oblig. Law §7-105(2)).

How does a New York seller notify tenants about the deposit transfer?

By registered or certified mail, giving the new owner's name and address (§7-105(1)).

Related guides

Add a task in ClosingCode for the deposit transfer and tenant notices, with an owner and a due date.

Start free trial

Source: New York General Obligations Law §7-105 (nysenate.gov, read October 26, 2026).

General information, not legal advice. ClosingCode is software; it is not a law firm. This guide is not a substitute for the advice or services of an attorney.